September 3, 2019
Quidel Corp. v. Superior Court (2019)Horvitz & Levy prevailed on an issue of importance to businesses across the state regarding the lawfulness of exclusivity provisions in contracts between businesses.
The trial court granted summary adjudication against Quidel Corporation invalidating an exclusivity provision in an ongoing relationship between two businesses engaged in a joint development, manufacture, and sales venture. The trial court’s order propagated a legal standard of per se invalidity that would have proven devastating to California businesses.
Horvitz & Levy filed a writ petition in the California Court of Appeal on behalf of Quidel. The Court of Appeal (Fourth District, Division One) filed a published opinion granting the writ petition and recognized that the case presented a “significant legal question of broad public interest.” The Court of Appeal reversed the grant of summary adjudication. It held that the exclusivity provision was not per se invalid under Business & Professions Code section 16600. Instead, exclusivity provisions among businesses are valid so long as they do not negatively affect the public interest, are designed to protect the parties in their dealings, and do not attempt to establish a monopoly.